A business may not take more than 6,000 shekels in cash, or more than 10% of the deal, whichever is lower. The rule is well known. What is less clear is what counts as a "deal". In May 2025 Tamar Bracha, head of the bookkeeping department at the Israel Tax Authority, spent a large part of a Tax Advisors Association webinar on it.
Her first point: the size of the deal includes VAT and every other tax that comes with it. When you buy a table for 15,000 shekels, delivery and the delivery warranty are part of the deal. A buyer who comes back two days later for two more chairs makes a new deal. Someone who asks in advance to split the same purchase into two invoices so they can pay cash commits a criminal offence, and so does the shop.
When a monthly payment is a single deal
For a service paid monthly, the question is what was agreed. Bracha gave a gym as an example. An annual membership at 500 shekels a month is a deal of 6,000 shekels, even if it is paid monthly and even if you can leave midway for a fee. A monthly membership at 600 shekels is a deal of 600 shekels. Rent is different: the law says explicitly that each payment is judged separately, even under a five-year lease.
On kindergartens the Authority's position is clear-cut. A school year is an annual deal, even when parents pay every month. "No kindergarten teacher will agree to enroll my child on a monthly basis," she said. When a kindergarten costs 3,000 to 5,000 shekels a month, the annual deal is well above 6,000, and a monthly cash payment is a breach. She said there was a round of audits at kindergartens, and many teachers and parents were fined. A clause letting parents leave any month does not change that.
Cases where more is allowed than it seems
A contractor who draws cement and blocks from the same shop through the month, and gets a summary invoice for 200,000 shekels at the end of it, made many small deals. According to her, he may even be allowed to pay the whole amount in cash, because the limit applies to each deal separately. This is judged by what actually happened, for example by the delivery notes.
A signed check with no amount written on it is not a check, so it is not a breach of the cash law even when the payee line is blank. A client who leaves checks with their accountant or tax adviser for paying taxes can write "to the order of Income Tax", "Bituach Leumi" or "VAT" on them. A check with no payee is forbidden for a business at any amount. A private person may give such a check up to 5,000 shekels, for example as a wedding gift.
After a breach is found
A notice of intent is sent, and there are 45 days to submit arguments. If none are submitted, the sanction letter goes out automatically within 90 days. According to Bracha, the regulations that would allow reducing a sanction for personal circumstances have been drafted for years and are still not approved. Until they are, arguments like "I didn't know" or "I paid the tax" do not reduce the sanction, and only a claim that there was no breach at all is considered. An appeal goes to the magistrates' court. In May 2025 the Authority had seven rulings under the cash law, and it had won all of them.
From January 1, 2026 the penalty grew. An expense paid in breach of the law, for which a sanction was imposed, is not deductible for income tax, and the input VAT on it is not deductible either.